Answer
(a) Comparative analysis of financial performance can be of three types:
i) Intracompany basis- Comparison within a company is called Intracompany, and is useful to detect changes in financial relationships and significant trends.
ii) Intercompany basis – Comparison with other company provide insight into a company's competitive position.
iii) Industry averages - Comparison with industry averages provide information about a company's relative position within the industry.
Work Step by Step
(b) The comparison is useful for analysis of financial performance:
i) Intracompany basis. Intracompany comparison is useful to detect changes in financial relationships and significant trends.
ii) Intercompany basis – Intercompany Comparison provide insight into a company's competitive position.
